McGuinty Government Announces $250M Fund

McGuinty’s government announced a new fund today oriented towards helping keep Ontario start-ups moving forward in the face of a non-existant venture capital market.  The fund will match private investments dollar for dollar.   It is said to be based upon a similar model implemented in Scotland.

This is a great step towards supporting innovation and start-ups.

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ex-High Techies in the Federal Government

After this blog entry I was immediately asked about the challenges those ex-techies who joined the Federal government have found.   Here is a quick summary of what I’ve been told:

  • Being under-employed/under-challenged (compared to their personal perceived capability)
  • Being discouraged from working excessive hours (one individual told me about a situation where a co-worker took them aside and asked them to stop working long hours because it was making the rest of them look bad  – however all other individuals I know said they had never experienced this type of behavior and in fact noted that people in their departments tended to work more then the regular work hours as a matter of course)
  • Really, really bad employees who are passed from department to department like a hot potato (these employees typically know how to exploit the various government union and HR policies to effectively do nothing and avoid being fired and consume vast amounts of their managers time and reputation in the process)
  • Political wars and games where each department was working to position themselves for projects they expect to see funded

In Nortel, I personally experienced:

  • Being under-employed/under-challenged (only when working on a  product transitioning to legacy support  – when this happened I usually changed jobs)
  • Being given really, really bad employees as part of a new project team (who I first mentored/worked with to help them develop missing skills or cultural awareness, and if that failed (only on one occasion) I put them into the HR process leading to termination/transfer to a job with a better fit)
  • Political wars and games where each department was working to position themselves for projects they expect to see funded

Anyone else from High Tech who ended up in the Federal government have observations to contribute?

Canadian Federal Government Employee Stereotypes

The stereotypical government employee is usually characterized as “lazy”, “inefficient”, “in by 9 out by 4″.

With the tech downturn, a lot of people I know ended up in the government.  The general consensus among the ex-tech people who ended up in the government is that yes,  there are pockets of poor performers and demoralized individuals – but by and large – the majority of government employees are motivated and engaged in doing the best job they can.  The other observation of the ex-tech people inside the government is that the internal politics are very similar (although more pronounced in some departments more then others!) to the politics that they encountered inside Nortel.

On a personal level, my observations and experiences with Federal government employees include:

  • I have made submissions and worked with the NRC-IRAP team over the years.   I have found the NRC-IRAP team in general to be top-notch from the executives down to the ITA’s – they recognize the importance of their role in the future of Canada tech development and they work as an engaged and committed partner.
  • Stats Canada produces high quality research reports that I have found to be very insightful and valuable in supporting my various market analysis activities over the years.
  • The Passport office is a model of efficiency and customer orientation.  When I look back to the first passport I got compared to the last one a few years ago – they have made massive improvements.  In general I have found they are increasingly efficient and customer service oriented.    The last time I went in to get my renewed passport – in-spite of a full waiting room of people – I was in and out in less then 30 minutes.   I personally like the way they introduced an option for a taxpayer to pay extra for expedited services.
  • On the e-Government side, e.g. making it easy to find information and access services online, the government continues to make improvements year over year.   I have always been able to find the information I need online.   As an aside – I believe our government’s expertise in e-Government is a area we should be looking to export/develop into commercial businesses.

Politicians aside, in general it is my opinion that we have a pretty good group of people working for us in the Federal government.

How Vulnerable is the Ontario Economy?

To understand how vulnerable the Ontario economy is to the current conditions of the US and Canada economy, it is useful to look at where the strength of the economy has traditionally been.

Structure of the Ontario Economy, 2007 Per Cent share of GDP

Some published reports that give some insights into the potential impacts on the Ontario economy and consequences include:

 

It is interesting to note that Quebec and Ontario account for over 85% of ICT manufacturing in Canada (based on 2002 numbers from Stats Canada).

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Some good sources of reference materials to dig deeper and form your own opinions are available at:

News articles reflecting important changes to the Ontario economy:

Unemployment in Canada will be 10% or higher in 2009..

The following table is based on historical data from Statistics Canada, it shows the tight coupling of US and Canada unemployment rates, with the Canadian rates generally lagging the US.  The Canadian unemployment rates have been historically higher then the US by anywhere up to 4%:

unemployment

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The current unemployment numbers for the US and Canada are as follows:

  • United States Department of Labor states the current unemployment rate as 8.1% as of February 2009.   States with double digit employment in January 2009 were reported as: California 10.1%, Michigan 11.16%, Rhode Island 10.3%, South Carolina 10.4%.
us-unemployment

US Department of Labor, Feb 6, 2009 - Unemployment Rate

  • Statistics Canada states the current unemployment rate as 7.7% as of February 2009, with Ontario at 8.7% unemployment

unemploymentrate

Statistics Canada, March 13 2009 - Unemployment Rate

The  historically tight coupling of the US and Canada unemployment rates mean that US forecasts can be reasonably used as a proxy for future Canadian unemployment rates.   Some sources and their forecasts for the 2009 US unemployment rate follow:

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Bank of Montreal is forecasting a US unemployment rate of 9.3% in 4Q09.

Royal Bank of Canada is forecasting a US unemployment rate of 8.8% in 4Q09.

Based on the current forecast US unemployment rates and past trends, I expect the Canadian unemployment rate to rise to over 10% and potentially over 14% nationally by 4Q09. (NOTE: Toronto Dominion bank’s March forecasts expect Canadian unemployment to reach 9.9% by 4Q09.)

The coupling of the Canada and US unemployment rates  is interesting in many ways.  In particular, there are academic papers that examine the question of Canadian government policy -  specifically, can Canadian policy have any significant impact on Canadian unemployment numbers due to the tight coupling of our economy to that of the US?

My sense is our government, in general, has little hope of stopping Canadian unemployment rates from following that of the US.   I believe that from a practical perspective, all our government can reasonably do is moderate the impact of the unemployment growth with special social and employment programs; and sustain our economy and workforce until the US economy recovers by driving infrastructure and  entrepreneurial economic development programs.

In order to break the cycle, the Canadian government should be actively working to diversify our economy by  aggressively fostering new small business development and developing export relationships and associated selling channels with other countries outside of the US.

Some interesting articles and papers on the US and Canada unemployment numbers include the following:

A factor that can have a big impact on the rate of unemployment growth is what protectionist actions are taken by Canada, the US and others.  It is almost inevitable that if the recession continues to deepen — politicians will find protectionism as  one of the last tools in their basket of options to try.   Already the politicians are dancing around this topic – some articles on this topic are below: